Dell Q3 earnings report shows revenue, income drop

Dell Computer Corp. released its third quarter earnings Thursday, reporting net income during the period of US$429 million, or 16 cents per share, on revenue of $7.5 billion.

Analysts polled by Boston-based First Call/Thomson Financial had estimated that Dell would report $7.27 billion in third-quarter revenue, with earnings of 15 cents per share. Last month, Dell had reaffirmed its earlier projections, which largely matched the results reported after the U.S. financial markets closed today .

Although the company pointed to solid growth in the shipment of its hardware products, revenues for the quarter ending Nov. 2 were still down 10 percent from the same period in 2000, when the company reported revenue of $8.2 billion. Operating income also dropped, from $818 million in 2000 to $544 million this year, a 34 percent decrease. Dell also said net income was off 36 percent from $674 million a year ago to $429 million this year.

Earnings were down as well, falling 36 percent from 25 cents per share last year.

Michael Dell, chairman and CEO of the company, pointed to growth in Dell's market share in several areas, highlighting a rise in the shipment of PowerEdge servers and notebook computers. He also pointed to services revenue, which totalled $716 million the quarter, up 15 percent from a year ago.

Total revenue from company services and peripheral products was $1.7 billion, up 16 percent and accounting for a record 23 percent of net sales.

"Customer preference for the value we're delivering in higher-end products and services is growing rapidly," Dell said. "In every part of the world, our highest growth rates were in enterprise products and portable computers. ... We're gaining share faster than ever in Dell's history [and] positioning ourselves exceptionally well for when the economy and spending on information technology improve."

Looking ahead, Dell indicated that the fourth quarter for the company is likely to show little growth.

Citing a combination of indicators, Dell suggested that fourth-quarter revenue would be off from the third quarter, with flat product shipments. Dell said he expects the company's own fourth-quarter volumes to rise about 5 percent sequentially, with revenue up just slightly. The company anticipates stable profit margins, with earnings for the quarter again at 16 cents per share.

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